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March 2013

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Preview of the 2013 Comprehensive Revision of the National Income and Product Accounts
Changes in Definitions and Presentations

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N JULY, the Bureau of Economic Analysis (BEA) will release the initial results of the 14th comprehen­ sive, or benchmark, revision of the national income and product accounts (NIPAs). The last comprehen­ sive revision was released in July 2009. Comprehensive NIPA revisions differ from annual NIPA revisions primarily because of the scope of the changes. Comprehensive revisions typically incorpo­ rate three major types of improvements: (1) changes in definitions and classifications that update the accounts to more accurately portray the evolving U.S. economy and to provide for consistent comparisons with data for the economies of other nations, (2) statistical changes that update the accounts to reflect the intro­ duction of new and improved methodologies and the incorporation of newly available and revised source data, and (3) changes in presentations that update the NIPA tables to reflect the changes in definitions and the statistical changes and to make the tables more in­ formative. Comprehensive revisions are usually con­ ducted at 5-year intervals that correspond with the integration of updated statistics from BEA’s quinquen­ nial benchmark input-output accounts.1 This article discusses the major changes in defini­ tions and presentations that will be a part of the up­ coming comprehensive revision.2 An article in May will describe the major statistical changes.3 An article in September will discuss the results of the revision, in­ cluding estimates that reflect the effects of the changes in definitions and statistical methods as well as the changes in presentation. Comprehensive revisions and, to a lesser extent, an­ nual revisions, provide the opportunity to introduce major improvements that are outlined in BEA’s strate­ gic plan for maintaining and improving its economic
1. This year’s comprehensive revision of the NIPAs will incorporate results from BEA’s 2007 benchmark input-output accounts, which will be released later this year. 2. The changes in definitions and classifications that are discussed in this article are changes that affect the conceptual content of the components of the NIPAs. 3. Last month’s SURVEY OF CURRENT BUSINESS introduced a statistical improvement that will be made to BEA’s measures of imputed financial ser­ vices of commercial banks. See Kyle K. Hood, “Measuring the Services of Commercial Banks in the National Income and Product Accounts,” SURVEY 93 (February 2013): 8–19.

accounts.4 BEA’s strategic plan for the national eco­ nomic accounts outlines several major objectives, in­ cluding addressing data gaps and other shortcomings, improving consistency and integration with other BEA accounts, and improving consistency with interna­ tional guidelines. These changes in definitions and presentations and the planned statistical improve­ ments constitute important steps toward meeting each of these objectives. This revision presents an opportunity to incorpo­ rate changes to the NIPAs that reflect the updated in­ ternational guidelines for national accounts, the System of National Accounts 2008 (SNA).5 BEA played a key leadership role in updating the SNA, which was de­ veloped by the international statistical community in order to facilitate comparisons between countries and to serve as a guide for countries as they develop their economic accounting systems. The United States pro­ duces all five of the core components of the SNA, rang­ ing from quarterly accounts to balance sheets, and with this revision, the NIPAs will have adopted the most important of the major changes introduced in the 2008 SNA, including the recognition of research and development expenditures as fixed investment and the accrual-based approach to measuring defined ben­ efit pension plans. Most other developed economies, including those of Europe, will have incorporated most of the major changes included in the 2008 SNA into their economic accounts by 2014. While the NIPAs will
4. The Bureau of Economic Analysis Strategic Plan for 2012–2016 is avail­ able on BEA’s Web site. 5. The latest edition of the System of National Accounts 2008 can be found at unstats.un.org.

be largely consistent with the SNA, they, like the ac­ counts of other countries, will differ from the SNA in some respects, especially in regard to the allocation of certain units or transactions to institutional sectors.6 The major changes in definitions and classifications in this comprehensive revision are as follows: ● Recognize expenditures by business, government, and nonprofit institutions serving households (NPISH) on research and development as fixed investment. ● Recognize expenditures by business and NPISH on entertainment, literary, and other artistic originals as fixed investment. ● Expand the ownership transfer costs of residential fixed assets that are recognized as fixed investment and improve the accuracy of the associated asset values and services lives. ● Measure the transactions of defined benefit pension plans on an accrual accounting basis by recognizing the costs of unfunded liabilities and showing the pension plans as a subsector of the financial corpo­ rate sector. ● Harmonize the treatment of wages and salaries by using accrual-based estimates consistently through­ out the accounts. These major improvements also result in presenta­ tion changes to the accounts. In addition, the reference
6. For discussion of differences between the NIPAs and the SNA, espe­ cially with respect to the sector accounts, see Charles Ian Mead, Karin E. Moses and Brent R. Moulton, “The NIPAs and the System of National Accounts,” SURVEY 84 (December 2004): 19–21. Note that some of the dif­ ferences between the NIPAs and the SNA in 2004, such as the treatment of military weapon systems, have now been resolved by the 2008 SNA adopt­ ing the treatment currently used in the NIPAs.

year for the chain-type quantity and price indexes and for the chained-dollar estimates will be changed to 2009 from 2005. In the following sections of the article, each change is described, the reason for the change is given, the cur­ rent treatment and the new treatment are outlined, and the effects on the NIPA summary accounts are provided. Also, the section “Changes in Presentations” describes the major changes to the NIPA tables as a re­ sult of the implementation of these improvements. Table 1 lists the major changes and the affected components of the NIPAs.

Changes in Definitions
Capitalization of research and development expenditures Research and development (R&D) is defined in the SNA as “creative work undertaken on a systematic basis to increase the stock of knowledge, and use of this stock of knowledge for the purpose of discover­ ing or developing new products, including im­ proved versions or qualities of existing products, or discovering or developing new or more efficient processes of production.”7 Expenditures for R&D have long been recognized as having the characteristics of fixed assets—defined ownership rights, long-lasting, and repeated use and benefit in the production pro­ cess. Recognizing that the asset boundary should be expanded to include innovative activities, such as R&D, the NIPAs will record private and government
7. SNA 2008, 119, paragraph 6.207.

expenditures for R&D as investment.8 Investment in R&D will be presented along with investment in soft­ ware and in entertainment, literary, and artistic origi­ nals in a new asset category entitled “intellectual property products,” beginning with 1929. These esti­ mates will be presented in a new table, an example of which is presented in table 2. The recognition of R&D as investment will improve BEA’s measures of fixed in­ vestment, allow users to better measure the effects of innovation and intangible assets on the economy, and make the NIPAs more consistent with recommenda­ tions in the SNA.9
Current treatment

Currently, expenditures for private R&D are not re­ corded as final expenditures in the calculation of gross domestic product (GDP). Expenditures for purchased R&D are classified as intermediate inputs, and the costs of producing own-account R&D (that is, produc­ tion of R&D by an enterprise for its own use) are sim­ ply included with the other costs of production and are not identified as contributing to the output of a separate commodity. For nonprofit institutions serv­ ing households (NPISH) and for governments, whose production is derived using a production-cost ap­ proach, expenditures for R&D are included in con­ sumption expenditures but generally are not separately identified. In addition, BEA’s estimates of exports and imports of services include R&D services.
New treatment

an enterprise’s R&D is equal to the present value of the future benefits that the company derives from the R&D. In practice, because future benefits are not ob­ servable and most R&D is produced on own-account, the standard approach is to measure the activity as the sum of production costs. Using data from National Science Foundation (NSF) surveys of R&D expendi­ tures by performer, BEA will estimate the production costs associated with spending for R&D to derive an­ nual current-dollar estimates of R&D output; table 3 lists several of the NSF surveys that will be used to esti­ mate R&D output. Adjustments to source data. After compiling NSFreported R&D expenditures, adjustments will be made for coverage, for scope, and for alignment with the NIPA framework and concepts.12 Sector assignment. Ownership of the R&D produc­ tion is needed to properly assign investment and in­ come flows to the business, NPISH, and general
12. Examples of the adjustments include (1) accounting for imported and exported R&D, (2) including R&D expenditures not captured in the NSF data in certain years—such as social science R&D—to align BEA’s measure of R&D with the SNA, (3) converting depreciation for structures and equipment used to produce R&D to an economic cost, rather than histori­ cal cost, basis, (4) reconciling NSF data with data from the Census Bureau’s economic censuses, (5) removing expenditures on software R&D that BEA already includes in NIPA estimates of investment in software, and (6) in certain cases, converting measures for purchased R&D from a cost-basis to a purchase-basis.

The new treatment will recognize expenditures for both purchased and own-account R&D by businesses, NPISH, and general governments as fixed investment and the depreciation of these assets in consumption of fixed capital (CFC).10 Government R&D expenditures will be treated as investment regardless of whether the R&D is protected or made freely available to the pub­ lic, because the provision of public services is part of the economic benefits generated by government R&D.11 Measuring R&D output. Conceptually, the value of
8. BEA first published an R&D satellite account that examined the impact of R&D expenditures on the U.S. economy in 1994; a revised satellite account was introduced in 2006, and updates to that account were pub­ lished in 2007 and 2010. For the most recent update, see Jennifer Lee and Andrew G. Schmidt, “Research and Development Satellite Account Update: Estimates for 1959–2007” SURVEY 90 (December 2010): 16–27. The R&D satellite accounts were produced with valuable support from the National Science Foundation, which continues to cooperate with BEA in the devel­ opment of R&D source data for estimating investment in the core eco­ nomic accounts. 9. SNA 2008,108, paragraphs 10.103–10.108. 10. Spillovers will not be included in the valuation of R&D, consistent with recommendations of the SNA (SNA 2008, 206, paragraph 10.102). 11. This treatment is consistent with recommendations of the SNA (SNA 2008, 122, paragraph 6.230, 206, paragraph 10.103).

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Preview of the 2013 Comprehensive Revision of the NIPAs

March 2013

government sectors in the NIPAs.13 BEA will classify the funder of the R&D, as reported in the NSF surveys, as the owner of the R&D. This decision was made for two primary reasons: (1) funders typically reserve some rights to the outcome of the R&D and receive economic benefits from the R&D; and (2) the alloca­ tion of ownership between the funder and the per­ former cannot otherwise be distinguished in the existing R&D survey data. In many cases, the owner­ ship of federally funded R&D may be less clear than for business-funded R&D. Federally funded R&D is sup­ ported through two primary mechanisms—purchases and grants. The ownership of purchased R&D is usu­ ally straightforward, because the federal government normally retains ownership of the outcome of the pur­ chased R&D activity. For grant-based R&D, however, the ultimate beneficiary is difficult to ascertain because both the federal government and the performer can benefit from the transaction. NSF surveys do not col­ lect information on the allocation of the ownership of federally funded R&D. Thus, due to lack of direct in­ formation on ownership, federal purchases and grants of R&D will both be treated as investment by the fed­ eral sector because the federal government is assumed to receive the primary economic benefit. R&D asset types. The application of produced R&D is generally unobservable, so BEA will classify R&D as­ sets by the industry or sector that is funding the R&D, as reported by NSF, in its presentations of private in­ vestment, capital stock, and CFC.14 Table 3 shows the source data for the R&D asset types that will be pub­ lished in the new intellectual property products NIPA table mentioned above.
13. For government enterprises, BEA will assume no investment in R&D. 14. For example, BEA will record NSF-reported pharmaceutical industry spending on R&D as investment in a pharmaceutical R&D asset.

Depreciation of newly recognized assets. The de­ preciation of R&D fixed assets will be included in con­ sumption of fixed capital, which is the economic charge for the decline in value of fixed assets as they age. R&D depreciation rates are critical for calculating the rates of return to R&D investments and capital ser­ vice costs. As with measuring R&D production, mea­ suring R&D depreciation rates is difficult because market values are generally unobservable. For business depreciation of R&D, unlike tangible assets that depreciate over time from physical decay or wear and tear, R&D depreciation reflects its declining contribution to a firm’s profit as R&D assets become less valuable or obsolete. Based on this understanding, BEA analyzed the relationship between investment in R&D and future profits using firm-level data and es­ tablishment-level data. Using this forward-looking profits model, in which each period’s R&D investment contributes to the profits in later periods but at a geo­ metrically declining rate, BEA derived R&D deprecia­ tion rates for certain R&D intensive industries.15 NPISH R&D depreciation will be based on estimates of business depreciation. For general government R&D, a contribution to profits is out of scope, but like business R&D, depreci­ ation reflects obsolescence over time. Based on this concept, BEA observed a progression of R&D invest­ ments by function that led to observable outcomes, such as investments in stealth technology that resulted in the development of particular military aircraft. As innovations give way to newer technologies, the origi­ nal R&D becomes less valuable or obsolete, thus bring­ ing an end to the effective service life of the R&D.
15. Wendy C.Y. Li, “Depreciation of Business R&D Capital,” Bureau of Economic Analysis and National Science Foundation R&D Satellite Account Paper (October 2012); www.bea.gov.

Table 3. National Science Foundation (NSF) Performer Surveys That Will Underlie the R&D Estimates
Sector Within private investment: Business Nonprofit institutions serving households Private nonprofit universities Other Within government investment: Government Federal State and local Public universities Other Description Business Research and Development and Innovation Survey 1 Higher Education Research and Development Survey 2 Surveys of nonacademic nonprofit institutions 3 Frequency Annual Annual Sporadic

Survey of Federal Funds for Research and Development Higher Education Research and Development Survey 2 Surveys of State Research and Development Expenditures 4

Annual Annual Sporadic

NOTE. For periods before NSF surveys are available, estimates will be primarily based on research from The Formation and Stocks of Total Capital by John Kendrick and Research and Development: Its Growth and Composition by Nestor Terleckyj and on estimates from BEA’s 1994 R&D satellite account. 1. Survey data will be used for estimates for 2008 forward. Estimates for 1953–2007 will be based on data from NSF’s annual Survey of Industrial Research and Development. 2. Survey data will be used for estimates for 2010 forward. Estimates for 1953–2009 will be

based on versions of annual NSF surveys of universities and colleges. 3. NSF survey data for nonprofit institutions are available for 1964, 1966, 1969, 1973, 1996, and 1997. When survey data are not available, estimates will be based primarily on data from the Census Bureau. 4. NSF survey data for state and local governments are available for 1964–1969, 1972, 1973, 1977, 1987, 1988, 1995, 2006, 2007, and 2009. When survey data are not available, various estimation methods will be used.

March 2013

SURVEY OF CURRENT BUSINESS adjustment for productivity gains.
Effects on the accounts

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Using this approach, BEA derived service lives for four federal government functions: defense, health, space, and energy. Quarterly estimates. Prior to 1991, quarterly esti­ mates of private business R&D investment will be interpolated using an aggregate wage series. For 1991–2007, a composite indicator series, constructed using weighted industry-specific wage and employ­ ment information from the Quarterly Census of Em­ ployment and Wages (QCEW), will be used to interpolate business R&D investment. For 2008 for­ ward, the pattern of quarterly R&D business invest­ ment will reflect a tabulation of R&D expenditures reported by publicly held firms in their quarterly fi­ nancial statements.16 Quarterly estimates of federal R&D largely will be interpolated using the pattern of R&D spending implied in the currently published esti­ mates of intermediate R&D services. Quarterly esti­ mates of NPISH and of state and local government R&D will be interpolated without an indicator. Prices. BEA will measure R&D price changes using an input-cost approach with a productivity adjust­ ment.17 For R&D that is produced for internal use by, or purchased from, businesses, NPISH, and state and local governments, BEA will construct an aggregate R&D composite input-price index based on input cost weights derived from spending category data from the NSF surveys. These categories include labor, material inputs, overhead, and depreciation. For recent time periods, BEA will primarily use existing price data from its GDP by Industry KLEMS program and aver­ age wages derived from the QCEW to construct the ag­ gregate price index. BEA will then apply a productivity adjustment to the input-cost price.18 R&D produced for internal use by, or purchased from, higher educa­ tion academic institutions will also reflect a similar in­ put-cost approach that is adapted to measure R&D costs incurred by academic institutions. The academic R&D price index will also be adjusted to account for productivity gains. For government R&D performed on own-account, BEA will derive prices using input costs for compensation of government employees and for intermediate goods and services purchased, with an
16. For advance estimates, R&D investment will be based on trend or employment and wage extrapolation that will be replaced in the second or third estimates as the R&D data from company financial reports become available. 17. Although the input-cost method is useful for estimating the impact of inflation on R&D inputs, it is less appropriate for R&D output because it does not account for productivity growth; it assumes that real output grows at the same rate as real inputs. An adjustment will be made to the inputcost price indexes to account for productivity gains that some would argue are perpetually inherent in R&D production, particularly given increases in computing power and other scientific advances. 18. The productivity adjustments will be based on nonfarm business mul­ tifactor productivity estimates produced by the Bureau of Labor Statistics.

The recognition of R&D as investment will affect esti­ mates of gross private domestic investment, personal consumption expenditures (PCE), and government consumption expenditures and gross investment. Gross private domestic investment will be boosted by the amount of business and NPISH R&D expendi­ tures. PCE will be reduced, as the impact of reclassify­ ing NPISH R&D expenditures to private investment more than offsets the additional consumption of fixed capital (CFC) associated with the expenditures. Gov­ ernment consumption expenditures and gross invest­ ment will be boosted by the CFC associated with the R&D investment—in government consumption ex­ penditures and gross investment, R&D spending will be reclassified from consumption expenditures to gross investment, and the additional CFC will be re­ corded in consumption expenditures. As a result, GDP will be boosted by the amount of business R&D invest­ ment and by the CFC associated with R&D investment by NPISH and by general governments. Based on pre­ liminary estimates for 2007, this change will boost the level of GDP by about 2 percent, or about $300 billion, with about two-thirds coming from private fixed in­ vestment and the remainder primarily coming from government consumption expenditures.19 On the income side of the accounts, the new treat­ ment will increase GDI by the same amount as GDP. CFC will increase by the amount of depreciation on the newly recognized R&D assets held by business, NPISH, and general government. The net operating surplus will increase by the difference between busi­ ness R&D investment and business CFC for R&D as­ sets (that is, the “net R&D investment”). In the private enterprise income account, corporate profits and proprietors’ income will increase by the net effect of removing spending on R&D from current production expenses and adding the CFC on the R&D assets to current production expenses. In other words, corporate profits will be boosted by the net R&D in­ vestment of corporate business and proprietors’ in­ come by the net R&D investment of noncorporate business. These changes will also be reflected by an equal increase in the net operating surplus of private enterprises. In the personal income and outlay account, the increase in proprietors’ income will boost personal income. The boost in personal income combined with the reduction in PCE will boost both personal saving
19. The impact on GDP from the additional CFC associated with NPISH R&D expenditures will be minor.

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Preview of the 2013 Comprehensive Revision of the NIPAs

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and the personal saving rate. In the government current receipts and expendi­ tures account, government consumption expenditures will be reduced, as the R&D investment removed from consumption expenditures will be greater than the ad­ ditional CFC, resulting in an increase to government saving. In the foreign transactions account, BEA will at­ tempt to separately identify the sales and purchases of R&D assets, such as patents, and reclassify them as ex­ ports and imports of R&D services. Currently, these transactions are included in exports and imports of royalties and license fees. Royalties and license fees will continue to include transactions related to the use of R&D assets. The reclassification will not affect overall exports and imports or the trade and current account balances.20 In the saving and investment account, the increases in personal saving, corporate profits, and government saving combined with the increase in CFC results in an increase in gross saving that is equal to the combined value of private and government R&D investment. Capitalization of entertainment, literary, and other artistic originals Some entertainment, literary, and other artistic origi­ nals are designed to generate mass reproductions for sale to the general public and to have a useful lifespan of more than one year. For 1929 forward, BEA will capitalize these items, which include theatrical movies, long-lived television programs, books, music, and “other” miscellaneous entertainment.21 This change will expand BEA’s measures of intangible assets in the
20. BEA is continuing to investigate how to fully implement the new treatment of R&D in the international transaction accounts (ITAs). Trans­ actions reflecting the sales and purchases of R&D assets are commingled with royalties and license fees in BEA’s source data. BEA is researching how to separately identify these transactions and to reclassify them as R&D ser­ vices. In addition, multinational corporations are important producers of R&D, and capitalizing R&D will impact direct investment receipts and pay­ ments. BEA’s surveys of multinational companies have been used to develop experimental estimates of the impact of capitalizing R&D on direct invest­ ment income for the BEA R&D satellite account; because both direct invest­ ment income receipts and payments will be raised by the new treatment, the impact on the direct investment income surplus is expected to be small. For a detailed discussion of the difficulties of identifying R&D in the ITAs and a detailed description of the methodology used to construct the inter­ national component of the R&D satellite account, see Carol A. Robbins and Carol E. Moylan, “Research and Development Satellite Account Update,” SURVEY 87 (October 2007): 49–64. Daniel R. Yorgason contributed the por­ tion on international R&D estimates. 21. Long-lived television programs include situation comedies and drama programs. Other types of television programs, including news programs, sporting events, game shows, soap operas, and reality programming have much shorter service lives and will not be capitalized. “Other” miscella­ neous entertainment includes miscellaneous artwork including theatrical play scripts, greeting card designs, and commercial stock photography.

NIPAs and help better align the NIPAs with recom­ mendations of the SNA.22
Current treatment

The costs associated with the production of entertain­ ment originals are currently classified as expenses that are consumed as part of the production of other goods and services. Therefore, expenditures for the produc­ tion of entertainment originals do not enter into the calculation of GDP.
New treatment

Under the new treatment, BEA will record the private expenditures associated with producing or purchasing entertainment originals as private fixed investment in the measure of GDP.23 The production of entertainment originals may span several years. Theoretically, these costs should be recorded as investment when accrued; however, due to practical constraints, BEA will record the value of the investment in the year the asset is released to the pub­ lic. Entertainment originals are rarely sold in an open market, so it is difficult to observe market prices for these original works. This is a common problem with measuring the value of intangible assets, and in such cases, other valuation methods must be utilized, such as the sum of the production costs (which is used for own-account software and R&D) or the estimated net present value (NPV).24 Because adequate information on production costs is not available for most entertain­ ment originals, BEA will estimate the value of these as­ sets based on the NPV of expected future royalties or other revenue obtained from these assets, net of any as­ sociated sales costs. For investment in theatrical mov­ ies prior to 2007, the estimates will be derived using a production costs approach based on movie budget data. For each type of entertainment originals asset, the expected net cash flow of the producing industry will be estimated using revenue and cost data from the Census Bureau’s economic censuses and surveys, nu­ merous trade sources, and databases such as
22. This change was introduced in a SURVEY article by Rachel H. Soloveichik, “Artistic Originals as Capital Assets,” SURVEY 91 (June 2011): 43–51. See also SNA 2008, 207, paragraph 10.115 and “Entertainment, Lit­ erary, and Artistic Originals,” in the Handbook on Deriving Capital Mea­ sures of Intellectual Property Products (Organization for Economic Co­ operation and Development (OECD): Paris, October 2010): 150–166. 23. BEA will not identify any investment in entertainment originals by governments. 24. The SNA discusses the use of NPV for estimating the value of assets (SNA 2008, 22, paragraph 2.60, 52, paragraph 3.137–138); see also the OECD Handbook on Deriving Capital Measures of Intellectual Property Prod­ uct, 18, 158–159.

March 2013

SURVEY OF CURRENT BUSINESS

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IMDb.com.25 BEA will assume a 7 percent real dis­ count rate for all asset types and will apply an NPV ad­ justment factor, a ratio that represents the average NPV-to-current period revenues from new works, to current-year revenues in order to derive an estimate of investment in entertainment originals for that year. Estimation methodology. First, total current-pe­ riod revenue from licensing fees, merchandise sales, ticket sales, and other revenue generating activities for the industries producing the assets will be estimated. Second, the value of sales costs—such as advertising, manufacturing of reproductions, and other marketing type costs—will be subtracted from the total current period revenues to derive net revenue values that cap­ ture only the revenues earned on the intangible as­ sets held by the business. Third, these net revenue values will be adjusted further to only include the reve­ nue from the release of new works (that is, the “orig­ inals”), using BEA-derived investment ratios.26 Finally, the NPV adjustment factor will be applied to the net revenue value that has been adjusted by the investment ratio in order to derive the current-period investment value of the future revenue stream of these new works. Depreciation of newly recognized assets. The de­ preciation of entertainment originals assets, like the depreciation of R&D assets, will be included in the NIPA measure of CFC. BEA will estimate service lives and depreciation rates for each type of entertainment originals asset based on its net present value over time as described above. The depreciation rates will follow a geometric pattern in which a constant percentage of the existing asset stock depreciates each year. The typi­ cal movie, for example, is released in theaters, followed by DVDs, premium television, regular cable networks, foreign television, and U.S. broadcast networks. Based on an analysis of the profits obtained from these suc­ cessive releases, BEA estimates an annual depreciation rate of 3.8 percent. For television programs, which earn a substantial proportion of their long-term reve­ nue in their first airing, the depreciation rate is 16.8 percent. For music, an even larger portion of profits is obtained in the first year of release, and so the esti­ mated depreciation rate is 26.7 percent. The estimated depreciation rate is 12.1 percent for books and 10.9 percent for theatrical play scripts, greeting card de­
25. BEA will benchmark its investment estimates to revenue data from the 2007 economic census. 26. Based on research using trade sources, studies, and survey and eco­ nomic census data from the Census Bureau, BEA estimates the following investment ratios for the five categories of entertainment originals assets: 51 percent of industry revenue for theatrical movies, 50 percent of industry revenue for music, 37 percent of industry revenue for books, 30 percent of industry revenue for television, and 15 percent of industry revenue for mis­ cellaneous artwork. The remaining revenue is spent on nonartwork costs such as advertising, stamping DVDs, or printing books. The NIPAs record these nonartwork costs as current production costs.

signs, and stock photography. Quarterly estimates. For 2007 forward, quarterly estimates will be based on data from the Census Bu­ reau’s quarterly services survey. For estimates prior to 2007, quarterly estimates for motion pictures invest­ ment will be based on data from trade sources, and es­ timates for other investment in entertainment originals will reflect trend extrapolation. Prices. BEA will deflate each investment category separately. For theatrical movies and long-lived TV programs, an input cost index will be constructed based on a weighted average of BLS producer price in­ dexes (PPIs) for video cameras and for electronic com­ puter manufacturing and the consumer price index (CPI) for “admission to movies, theaters, and con­ certs” (which serves as a proxy for input costs associ­ ated with scripts, scenery, costumes, and actors). This composite input cost index will be adjusted to account for productivity growth in the movie industry by using total nonfarm business sector multifactor productivity (MFP). For literary, music, and miscellaneous enter­ tainment originals, BEA will use a combination of PPIs and CPIs that correspond with measuring the value of the asset.
Effects on the accounts

The recognition of entertainment originals as invest­ ment will boost the level of gross private domestic in­ vestment, which will in turn boost the level of GDP. Based on preliminary research, private investment in entertainment originals for 2007 is estimated at about $70 billion. About one-third of the new investment is in theatrical movies, one-third in television programs, and the remaining one-third in the other entertain­ ment original assets. On the income side of the accounts, the new treat­ ment will increase GDI by the same amount as GDP. CFC will increase by the amount of depreciation on the newly recognized entertainment originals assets held by private enterprises. Net operating surplus will increase by the difference between the entertainment originals investment and related CFC (that is, the “net entertainment originals investment”). In the private enterprise income account, corporate profits and proprietors’ income will be affected by the net effect of removing spending on entertainment originals from current production expenses and add­ ing the CFC on the entertainment originals assets to current production expenses. In other words, corpo­ rate profits will be affected by the net entertainment originals investment by corporate business, and pro­ prietors’ income will be affected by the net entertain­ ment originals investment of noncorporate business. These changes will balance with the increase in the net

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Preview of the 2013 Comprehensive Revision of the NIPAs

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operating surplus of private enterprises. In the personal income and outlays account, the ef­ fect on nonfarm proprietors’ income will flow through to personal income and will impact personal saving and the personal saving rate. In the saving and investment account, the impacts on personal saving and corporate profits combined with the increase in CFC will increase gross saving by the amount of the newly recognized investment. Capitalization of ownership transfer costs of residential fixed assets “Ownership transfer costs” are the expenses associated with the acquisition and disposal of fixed assets. For residential fixed assets, these costs include brokers’ commissions on the sale of new and used structures and the underlying land; title insurance; title, abstract, and attorney fees (that is, closing costs other than those associated with obtaining a mortgage); payments for state and local government documentary and stamp taxes; and payments for surveys and engineering services. Ownership transfer costs are a form of invest­ ment because, like other types of fixed investment, these costs are incurred in order to receive economic benefits over the entire period the asset is held. Currently, only brokers’ commissions on the sale of structures are capitalized. Under the new treatment, for 1929 forward, BEA will recognize all of the owner­ ship transfer costs as capital investment and will record the depreciation of these costs over the typical holding period of the asset. This change will improve the NIPA estimates of residential fixed investment, rental income of persons, and consumption of fixed capital by clari­ fying the scope of residential investment and by better aligning the timing of the depreciation of residential investment with the housing services received by the purchaser. In addition, the change will better align the NIPAs with recommendations of the SNA.27
Current treatment

life as the dwelling, which for one-unit dwellings, is es­ timated at 80 years. As a result, BEA’s estimates of resi­ dential fixed assets have been overstated (because the transfer costs from multiple owners remain embedded in the capital stock estimates), and CFC has been un­ derstated.
New treatment

Under the new treatment, BEA will recognize the nonfinancial ownership transfer costs (including both the acquisition and expected disposal costs) associated with the purchase of a residential asset as capital trans­ actions and will record these transactions as gross in­ vestment in residential structures. Expenses associated with financing a purchase of a residential asset, such as loan origination fees, credit reports, and adjustment and collection expenses, will continue to be recorded as current expenses, because these expenses represent financial services and are not necessary to purchase a dwelling.28 In addition, consumption of fixed capital will reflect these capital expenditures, and will be based on the typical holding period of the asset—estimated to be 12 years—rather than the average life of the structure, es­ timated to be 80 years. For transfer costs paid at the time of the disposal of the asset, such as brokers’ com­ missions paid by sellers, depreciation will begin prior to the incurrence of the cost in order to align the tim­ ing of the depreciation expenses with the economic benefits received by the owner; chart 1 compares the timing of the depreciation of disposal costs in the cur­ rent treatment and the new treatment. As a result, bro­ kers’ commissions will depreciate much more rapidly than previously estimated.29
Effects on the accounts

Currently, the NIPAs only capitalize brokers’ commis­ sions on the sale of residential structures; these commissions are recorded in the NIPA estimates of gross private residential fixed investment in structures. Other ownership transfer costs are recorded as current expenses in deriving estimates of rental income of per­ sons, of nonfarm proprietors’ income, and of corpo­ rate profits. In addition, the associated depreciation rates for brokers’ commissions reflect the same service
27. For a discussion of the recommended treatment of these costs, see SNA 2008, 200–201, paragraphs 10.48–10.55 and 211–212, paragraph 10.158.

As a result of this new treatment, both gross private residential fixed investment in structures and GDP will increase by the amount of the newly capitalized acquisition and disposal costs. For 2007, these costs will total approximately $60 billion. Brokers’ commis­ sions on structures, which are already capitalized, total
28. The treatment of ownership transfer costs (for both acquisition and disposal costs) for nonresidential structures will not change; brokers’ com­ missions on nonresidential structures will continue to be capitalized, and all other costs will remain current expenses. 29. Consistent with recommendations of the SNA, the new treatment will depreciate actual acquisition costs (beginning at the time of ownership transfer) and expected disposal costs (beginning at the time of purchase in anticipation of future disposal). Because the depreciation of expected dis­ posal costs begins before the eventual sale of the dwelling by the purchaser, the current-cost net stock of ownership transfer costs (that is, the acquisi­ tion costs less the disposal costs) may be negative in some years. These net stocks will be shown in BEA’s fixed asset accounts.

Number of years after sale of fixed asset
U.S. Bureau of Economic Analysis

approximately $85 billion. As a result, the total amount of ownership transfer costs for 2007 will be about $145 billion. On the income side of the accounts, the new treat­ ment will result in a parallel increase in GDI through its net effects on two components: net operating sur­ plus (specifically, the sum of rental income of persons, nonfarm proprietors’ income, and corporate profits) and CFC. CFC will increase by the amount of the de­ preciation on the newly recognized capital costs as well as the faster depreciation rate of brokers’ commissions on residential structures. Net operating surplus will decrease by the difference between the newly recog­ nized capital costs and the related CFC (that is, the “net investment in ownership transfer costs.”) As with GDP, GDI will be boosted by the amount of the newly capitalized costs; the statistical discrepancy will be un­ affected. In the private enterprise income account, the com­ ponents of the net operating surplus, rental income of persons, proprietors’ income, and corporate profits, will reflect the net effects described above. In the personal income and outlay account, the re­ ductions in rental income of persons and in propri­ etors’ income will result in reductions to both personal income and saving. In the gross saving and investment account, the re­ ductions in personal saving and undistributed corpo­ rate profits will be more than offset by the additions to CFC. As a result, gross saving will increase by the same amount as gross investment.

Measure transactions of defined benefit pension plans on an accrual basis Employer-sponsored retirement plans are generally or­ ganized into two types: (1) defined contribution plans, which provide benefits during retirement based on the amount of money that has accumulated in an em­ ployee’s account, and (2) defined benefit plans, which provide benefits during retirement based on a formula that typically depends on an employee’s length of ser­ vice and average pay among other factors. To fund promised benefits to retirees, defined benefit plans pri­ marily rely on two major sources of income: (1) con­ tributions from employers and employees and (2) interest and dividend income earned on the financial assets that the plans hold.30 BEA will change its recording of the transactions of defined benefit pension plans from a cash accounting basis to an accrual accounting basis as part of the com­ prehensive revision. In addition, BEA will separately identify a pension plan subsector in the NIPAs and, to the extent possible, provide estimates of the current re­ ceipts, current expenditures, and cash flow for the subsector. The introduction of a pension plan subsector will improve the consistency of the NIPAs with the Federal Reserve Board’s flow of funds accounts and will more closely align the NIPAs with recommenda­ tions of the SNA. Accrual accounting is the preferred method for compiling national accounts because it matches in­ comes earned from production with the correspond­ ing productive activity and records both in the same period.31 The recording of defined benefit pension plan transactions on an accrual basis will better align pen­ sion-related compensation with the timing of when employees earned the benefit entitlements and will avoid the volatility that arises if sporadic cash pay­ ments made by employers into defined benefit pension plans are used to measure compensation.32 In cases when defined benefit pension plans are underfunded or overfunded, the employers’ pension plan expenses
30. In addition, many plans hold assets that are expected to yield capital gains, which are treated as changes in the balance sheet rather than as cur­ rent income in the NIPAs. If capital gains are realized as expected, the resulting increase in the value of the assets will provide additional resources for paying pension benefits. 31. For a variety of reasons, accrual accounting of all income flows is not always feasible. In these instances, BEA uses cash accounting and records the income flows in the period they are received or paid. 32. Preliminary research on accrual-based estimates of the transactions of the defined benefit pension sector was presented in Marshall B. Reinsdorf and David G. Lenze, “Defined Benefit Pensions and Household Income and Wealth,” SURVEY (August 2009): 50–62.

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also will be measured more accurately under the ac­ crual approach. Additionally, measuring the transac­ tions of defined benefit pension plans on an accrual basis will provide a more accurate measure of the prof­ its of the employer and the income, saving, and wealth of households.
Current treatment

The NIPAs treat the persons participating in a pension plan as the owners of the plan’s assets, so most eco­ nomic transactions conducted by pension plans are shown as part of personal income and outlays. Em­ ployers’ cash contributions to pension plans are re­ corded in compensation of employees as part of “supplements to wages and salaries.” In addition, the interest income and dividend income earned on pen­ sion plan assets are recognized as being paid to persons and are included in the estimates of personal interest income and personal dividend income. Noninsured pension plans are part of the business sector, but the only economic transactions conducted by pension plans that are shown in the business sector and not re­ routed to the personal sector are the expenses associ­ ated with administering the plans. Within personal consumption expenditures, an imputation for the ex­ penses of administering pension plans is recorded as part of “financial services furnished without payment.”
New treatment

In implementing the accrual approach, BEA will treat defined benefit pension plans as “pass-through” entities that are effectively owned by the household sector and will classify these plans as financial corpora­ tions that receive contributions and property income on behalf of plan participants but do not have income or saving of their own. As a result, new tables showing the transactions of the defined benefit pension subsec­ tor will be presented; an example of the new presenta­ tion is shown in table 4. An employer who offers a defined benefit pension plan promises that an employee will receive a specified amount of future benefits that usually increases with each year of service. “Claims to benefits accrued through service” (also referred to as “normal cost” by pension actuaries) represent the present value of the additional benefits that plan participants earn from employment during the accounting period. Normal cost provides a more accurate measure of the com­ pensation of employees than the employers’ cash con­ tributions to the pension plans, which may have little relationship year-by-year with the benefits that

* Imputation
NOTE. The values shown in this table are for illustrative purposes only.

For defined benefit plans, the cash accounting ap­ proach is inadequate because the value of the benefit entitlements that participants accrue during a year of­ ten fails to coincide with the plans’ cash receipts.33 For example, employers sometimes skip contributions when the plans have enjoyed unusually good invest­ ment returns, including holding gains. As a result, the cash accounting measure of employee compensation can show large swings that do not accurately reflect the growth in pension entitlements.34 To measure pension entitlements when they are accrued, BEA will adopt the accrual accounting approach for measuring pen­ sion income, relying on actuarial estimates of pension costs.
33. For defined contribution pension plans, BEA’s current treatment will not change, because these plans already record contributions on an accrual basis, and the plans’ assets are directly linked to employees. 34. Under the cash accounting approach, an employer’s decision to defer contributions to a later date also results in its operating surplus being over­ stated in the current period.

employees are accruing.35 Under the accrual approach, the compensation of employees consists of the value of the pension prom­ ises made by the employer. To enable the pension plan to pay the promised benefits, the employer will make actual and imputed contributions, based on normal cost. By definition, the sum of the actual and imputed contributions equals the value of the pension prom­ ises, so the NIPAs will show employers’ actual and im­ puted contributions as part of compensation of employees.36 The actual and imputed contributions will then be rerouted to the pension fund as an implicit contribution, or transfer, from the personal sector to the pension plan subsector. The interest and dividend income that the pension fund earns by investing in fi­ nancial assets will be passed through to households as imputed payments of interest and dividend income, and the households will reinvest the same amount of income in the fund in the form of household pension contribution supplements. In some cases, a pension plan may be underfunded or overfunded, implying that the fund does not have sufficient financial assets or that it has assets in excess of what are needed to earn the returns that are necessary to provide for promised future benefits. In these cases, the employer is usually liable to ensure the payment of the promised benefits, so the new treat­ ment will show an imputed interest cost on the un­ funded actuarial liability that is paid by the employer to the pension fund.37
35. How to account for benefits accrued by participants in defined benefit plans is discussed in SNA 2008, 361–363, paragraphs 17.144–17.186. BEA’s treatment differs from the recommendations in these paragraphs in three respects. First, if a pension plan has an unfunded actuarial liability, the NIPAs will show an imputed interest expense for the employer responsible for making up the foregone investment earnings of the underfunded pen­ sion plan. The SNA guidelines do not currently recommend this imputa­ tion, though the issue is being discussed at international advisory groups and workshops. Second, the NIPAs assume that the imputed interest pay­ able to households on benefit entitlements is equal to the sum of the actual property income and the imputed interest received by the plans. In con­ trast, the SNA recommends that the interest accrued on benefit entitle­ ments be calculated from the actuarial assumptions alone. Third, the NIPAs consistently apply the accrual approach to pension income in measures of both disposable income and saving. In contrast, the SNA uses a split approach in which the disposable income measures are based on cash bene­ fits, whereas measures of saving are based on accrued benefit entitlements. 36. The imputed employer contributions will be calculated as the normal cost, plus the administrative expenses, less the values of actual employer and household contributions. 37. In the case of an underfunded pension plan, the investment income that the plan foregoes because of the shortfall in its assets must be made up by the employer, so an estimate of the foregone income will be recorded as an imputed interest cost for the employer that reflects an implied loan from the pension fund to the employer. In the case of an overfunded pension plan, the extra investment income earned by the plan reduces the required amount of employer contributions, so the employer’s imputed interest cost will be negative.

Because the accounts will show the pension funds’ monetary and imputed interest and dividends as paid out in the form of imputed interest and dividends to persons, the pension plan subsector’s net interest (in­ terest paid less interest received) and net dividends (dividends paid less dividends received) will be zero. A pension plan also distributes benefit payments and withdrawals of employee contributions to persons. These distributions reduce households’ claims for fu­ ture benefits; the net growth in claims on a pension plan for future payments of benefits is known in the SNA as the “adjustment for the change in benefit enti­ tlements.” Putting pension plans in a separate sector from households implies that the cash accounting measure of pension income of households equals the benefits payments and withdrawals less household contributions plus the administrative services that are provided in kind to households. In an accrual account­ ing framework, however, the net growth in the house­ holds’ claims to future benefits also counts as income, so the adjustment for the change in benefit entitle­ ments represents the difference between the cash ac­ counting and accrual accounting measures of household income. With this adjustment, distributions paid by the plan to households will equal contributions to the pension plan; contributions include the imputed employer contributions and the household contribution supple­ ments. If employer contributions are viewed as income to households that households then contribute to the pension plan, then the contributions represent pay­ ments into the plan from households, and the distribu­ tions represent payments to households by the plan. The equality between adjusted distributions and con­ tributions therefore implies that net transfers from the pension plan sector to the personal sector will be zero. The inclusion of pension plans in the corporate sector will not therefore give rise to net current business transfer payments. With all of these imputations, the corporate profits and undistributed profits of the pen­ sion plan subsector will be zero, because all accrued in­ come will be passed through to persons. Transactions of the pensions sector. As shown in table 4, the current receipts of the new pension plan subsector will consist of output, contributions, and in­ come receipts on assets. Output will represent the im­ plicit sale of the administrative expenses of the pension plan to households. Contributions will include amounts to cover claims to benefits accrued through service and household pension contribution supple­ ments. Income on assets received by pension plans will

24

Preview of the 2013 Comprehensive Revision of the NIPAs

March 2013

include monetary interest and dividends earned on the assets held by the plan as well as imputed interest earned on the unfunded actuarial liabilities. The current expenditures of the pension plan subsector will consist of administrative expenses associ­ ated with running the plans, imputed income payments on assets to persons, benefit payments and withdrawals, and the adjustment for the change in pension entitlements. Sources and methods. For both privately sponsored and state and local government sponsored plans, BEA will adopt an accumulated benefit obligation (ABO) method for estimating normal costs and interest costs.38 In the case of private plans, the ABO method aligns with the source data that BEA will use and with legal standards for private pension plan funding. For federal government plans, BEA will use a projected benefit obligation (PBO) method in order to maintain consistency with the main sets of published actuarial estimates of federal pension plans and with the meth­ ods used to determine the required contributions to federally funded pension plans.39 For privately sponsored plans, estimates of normal costs for 2000 forward will be based on ABO measures reported in actuarial schedules of the Internal Revenue Service (IRS) form 5500. The discount rate assump­ tion will be based on the AAA corporate bond rate published by the Federal Reserve Board. Prior to 2000, IRS-reported tabulations of normal costs are not avail­ able. Thus, BEA will calculate current-period normal cost by applying a normal cost rate to covered payrolls for each period. The normal cost rate will be extrapo­ lated using future benefits paid as an indicator. Estimates of normal costs for state and local govern­ ment sponsored plans will be drawn from a large sam­ ple of actuarial valuation reports for plans back to 2000. BEA will adjust these data to reflect an ABO ac­ tuarial cost method and the same discount rate series used for private plans. Before 2000, BEA’s estimates of normal cost per employee will be extrapolated using actual estimates of covered employees from Census Bureau surveys, other agency surveys, and periodic surveys that describe the pension plans’ characteristics. For federal government sponsored plans, estimates of normal costs will be based on data published in the
38. The ABO method counts only benefits that have already been accrued as the pension wealth of the plan participants and excludes the effects of projected future events such as pay raises. In the private sector, employees cannot count on having the opportunity to gain from future pay raises, because employers often freeze or terminate the defined benefit plans that they sponsor. The effect of future events on the pension wealth of employ­ ees of state and local governments is also uncertain because their required contribution rates may rise and reductions in plan generosity, such as reduced cost of living adjustments, are no longer viewed as impossible. 39. For a more indepth discussion of the differences between ABO and PBO actuarial accounting methods, please see Reinsdorf and Lenze.

annual actuarial reports on the major civilian and mil­ itary employee retirement plans. For years when actu­ arial data are not available (before the mid-1980s), BEA will derive normal costs from payrolls by apply­ ing normal cost rates that will be extrapolated back to 1929, taking into account historical changes in benefit rules and prevailing interest and inflation rates. The normal costs for the civilian and military plans will be boosted slightly to account for smaller retirement plans such as those for employees of the Foreign Ser­ vice and the Coast Guard. For private and state and local government plans, BEA will measure imputed interest costs by multiply­ ing the assumed interest rate by the difference between the market value of the plan’s assets and its actuarial li­ ability. For private plans, annual liabilities will be esti­ mated by dividing annual asset values by annual funding ratios published by the Pension Benefit Guar­ anty Corporation (PBGC) and by the Pension Re­ search Council.40 BEA will then impute an interest cost of the difference between plan liabilities and plan assets assuming the same rate of return based on AAA corpo­ rate bond rates published by the Federal Reserve Board. For state and local sponsored plans, the actuar­ ial liabilities will be based on the financial reports for a large sample of the plans back to 2000 and, as with normal costs, extrapolations back to 1929. For federal plans, actuarial liabilities will be derived using estimates of normal cost, pension benefits paid, and a rate of return based on assumptions made by federal actuaries or on interest rates of federal debt se­ curities. Imputed interest on the unfunded actuarial li­ ability will be measured as the difference between the interest cost of the total actuarial liability at the as­ sumed interest rate and the plans’ actual interest re­ ceipts.
Effects on the accounts

In the domestic income and product account, NIPA measures of compensation and net operating surplus will be affected. In compensation, supplements to wages and sala­ ries will reflect the addition of the imputed employer contributions. For state and local government spon­ sored plans, the revisions to compensation will gener­ ally be positive. For private and federal government
40. For 1979 forward, funding ratios for private plans will be derived from actuarial liabilities and assets reported on form 5500 and published by PBGC. Assets will be at market value, and liabilities will be adjusted by BEA with a discount factor based on the AAA corporate bond rate published by the Federal Reserve Board. Prior to 1979, BEA will estimate liabilities from funding ratios published by the Pension Research Council in Richard A. Ippolito, Pensions, Economics and Public Policy (Homewood, IL: Dow JonesIrwin, 1986) and from assets published in Patrick W. Skolnik, “Private Pension Plans, 1950–1974,” Social Security Bulletin 39 (June 1976): 3–17.

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SURVEY OF CURRENT BUSINESS

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compensation, the direction of revisions will vary, de­ pending on the period. For 1968–85 and for 2002 for­ ward, private compensation will generally be revised down. For 1980 forward, federal government compen­ sation will be revised down, reflecting the fact that the federal government has made large cash contributions to its pension funds as “catch up” payments. As a re­ sult, for these years, actual contributions exceed actu­ arial contributions, and BEA’s estimate of imputed contributions will be negative. Because BEA measures government consumption expenditures using input costs, the revisions to compensation of both federal and state and local government employees will flow through to GDP. For example, GDP for 2007 will be re­ vised up about $30 billion, reflecting an upward revi­ sion to state and local government spending of about $80 billion that will be partly offset by a downward re­ vision to federal government spending of about $50 billion. In the private enterprise income account, three components of the net operating surplus will be af­ fected: income receipts on assets, income payments on assets, and corporate profits.41 Within income pay­ ments on assets, interest paid by private enterprises will change, reflecting the imputed interest payments by employers for underfunded or overfunded actuarial liabilities. In addition, interest and dividend payments will also increase to reflect the imputed interest and dividend payments by pension plans to persons, pass­ ing through the interest and dividend receipts. Income receipts on assets will increase, reflecting the monetary interest and dividends received by pension plans as well as the imputed interest received by pension plans from employers for underfunded or overfunded actu­ arial liabilities. Corporate profits will change, reflecting the difference between cash-based and accrual-based compensation and the interest costs of any under­ funded or overfunded actuarial liabilities. As a result, the revisions to corporate profits will range from a downward revision of about $35 billion for 2001 to an upward revision of about $45 billion for 1982. In the personal income and outlay account, com­ pensation of employees will reflect the switch from cash to accrual accounting. Income receipts on assets will increase, reflecting the pass-through of the newly recognized imputed interest cost for underfunded or overfunded actuarial liabilities. The composition of personal interest and dividend income will also reflect the reclassification of these flows from monetary to imputed interest as a result of the recognition of the new pension plan subsector. The combined effects of
41. BEA’s estimates do not currently identify defined benefit pension plans within the noncorporate business sector, so proprietors’ income is unaffected.

the revisions to compensation and to income receipts on assets will flow through to personal saving. Personal saving will be revised up for most years; for 2007, per­ sonal saving will be revised up about $155 billion. In the government current receipts and expendi­ tures account, government consumption expendi­ tures will be revised by the amount of the revision to government employee compensation. Interest paid will be revised up, reflecting imputed interest paid on the underfunded or overfunded actuarial liabilities. As a result, net government saving will be revised down; for 2007, net government saving will be revised down about $140 billion. In the domestic capital account, gross saving will be unaffected, as the revisions to personal saving, to cor­ porate profits, and to government saving will offset. Harmonize the treatment of wages and salaries The NIPAs currently present estimates of wages and salaries on both an accrual basis (within GDI and na­ tional income) and on a disbursement (or cash) basis (within personal income). With this comprehensive revision, estimates of wages and salaries that are a component of personal income will be presented on an accrual basis back to 1929. This change will better align transactions of the personal income and outlays ac­ count with those of the private enterprise income ac­ count (which are in general recorded on an accrual basis), simplify the presentation of wages and salaries within the accounts, and help bring the NIPAs in line with recommendations of the SNA.42
Current treatment

Three different compensation measures are currently presented in the NIPAs. Within personal income, “compensation of employees, received” reflects esti­ mates of wage and salaries on a disbursement basis. Within both GDI and national income, the respective compensation measures, “compensation of employees, paid” and “compensation of employees,” reflect esti­ mates of wages and salaries on an accrual basis.43 Wages and salaries throughout the NIPAs are con­ verted from a disbursement basis to an accrual basis by applying a timing adjustment to the underlying data to account for variations in when wages were paid versus
42. For the recommendation for accrual accounting, see SNA 2008, 21, paragraphs 2.55–2.56. 43. Wages and salaries in GDI differ from those in national income. The difference reflects the recording of wage flows to and from the rest of the world. “GDI” wages include wage and salary payments to the rest of the world and exclude wage and salary receipts from the rest of the world. Con­ versely, “national income” wages include wage and salary receipts from the rest of the world and exclude wage and salary payments to the rest of the world.

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when the productive activity occurred. Within GDI and national income, this timing adjustment is pre­ sented as a separate line item, “wage accruals less dis­ bursements” (WALD). In practice, there is often little information on timing differences between accruals and disbursements. The estimated WALD may be zero if there is little evidence of a difference between accru­ als and disbursements, or an estimate may be prepared if one is deemed necessary.44
New treatment

Table changes that reflect the new treatment of own­ ership transfer costs of residential assets ● New tables that display the transactions of defined benefit pension plans ● A change in the reference year from 2005 to 2009 for chain-type quantity and price indexes and for chained-dollar estimates Detailed changes to the NIPA tables are presented in table 6, beginning on page 30. Most table changes that result from changes in definitions are described above or in table 6.
●

Within personal income, wages and salaries will be presented on an accrual basis and will be consistent with the estimate of compensation of employees in na­ tional income, thus eliminating the need for the WALD line item in the accounts. If any timing adjust­ ments are needed to convert the primary source of in­ formation on annual wages and salaries—the BLS Quarterly Census of Employment and Wages—from a disbursement basis to an accrual basis, those adjust­ ments will be recorded in the wage reconciliation, table 7.18.45
Effects on the accounts

Investment in intellectual property products

As a result of this change, the personal income wage and salary component presented in NIPA table 2.1 and the national income wage and salary component pre­ sented in NIPA table 1.12 will be identical. To the ex­ tent that the implementation of this change results in revisions to the timing adjustments that are made in preparing accrual-based estimates of wages and sala­ ries, GDI and the statistical discrepancy will also be re­ vised. In addition, to the extent that the revised accrual-based estimates differ from the previous dis­ bursement-based estimates used in personal income, personal income and personal saving will be revised.

The recognition of the new intellectual property product types—research and development and enter­ tainment, literary, and artistic originals—and the re­ classification of investment in software as intellectual property products will affect the NIPA tables that present estimates of private or government fixed in­ vestment. In addition, a new set of NIPA tables, 5.6.1–5.6.6, will be added to the NIPA investment ta­ bles and will present estimates of private fixed invest­ ment in intellectual property products. Numerous other tables will be affected; these changes are itemized in table 6 at the end of this article.
New treatment of ownership transfer costs of resi­ dential assets

Changes in Presentations
Several changes in presentations will be implemented, including the following: ● Table changes that reflect the new treatment of research and development and other intellectual property, including a new asset category “intellec­ tual property products”
44. Historically, the methods by which BEA has derived the WALD have been inconsistent and subject to much judgment. More recently, even for circumstances where one could reasonably argue there is justification for a WALD (that is, to account for financial industry year-end bonus payments that typically occur between fourth and first quarters), the application of seasonal adjustment makes the task of applying timing adjustments much more difficult. 45. In practice, BEA expects to make timing adjustments only when reli­ able information is available on differences between accruals and disburse­ ments. Because reliable source data are generally lacking on these differences, timing adjustments are expected to be infrequent.

As a result of the recognition of additional ownership transfer costs, the NIPA series residential “brokers’ commissions on sale of structures” in NIPA tables 5.4.1–5.4.6 will be renamed residential “brokers’ com­ missions and other ownership transfer costs.” Table 7.13, which shows the relation of consumption of fixed capital in the NIPAs to depreciation and amortization as published by the Internal Revenue Service, will re­ flect an additional adjustment for the capitalization of residential real estate disposal costs.46
New treatment of defined benefit plans

To better identify and understand the transactions of the defined benefit pension plan sector, BEA will pub­ lish four new tables; a sample of detailed lines from the new tables is presented in table 4. In addition to what is shown in table 4, the new tables will present the cash flow of the pension sector and the effects of participa­ tion in defined benefit pension plans on personal in­ come, saving, and wealth. The new NIPA table 7.20 will present the transactions of the defined benefit pension sector, and tables 7.21–7.23 will separately
46. The new treatment will also result in a small increase in the capital consumption allowance in recognition of ownership transfer costs incurred by sole proprietors and partnerships and by corporations.

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present transactions for the defined benefit pension plans of the private, federal government, and state and local government sectors, respectively.47
47. The new tables will identify the costs and income flows associated with defined benefit pension plans only; BEA plans to expand the presenta­ tion to include defined contribution plans in a future annual revision.

New treatment of wages and salaries The removal of the WALD will impact the NIPA sevenaccount summary; the revised presentation is pre­ sented in table 5. In addition, numerous NIPA tables will be affected; changes to these tables are itemized in table 6 at the end of this article.

Account 2. Private Enterprise Income Account
Line 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Income payments on assets Interest and miscellaneous payments Dividend payments to the rest of the world Reinvested earnings on foreign direct investment in the United States Business current transfer payments (net) To persons (net) To government (net) To the rest of the world (net) Proprietors’ income with IVA and CCAdj Rental income of persons with CCAdj Corporate profits with IVA and CCAdj Taxes on corporate income To government To the rest of the world Profits after tax with IVA and CCAdj Net dividends Undistributed corporate profits with IVA and CCAdj Line 19 Net operating surplus, private enterprises 20 Income receipts on assets 21 Interest 22 Dividend receipts from the rest of the world 23 Reinvested earnings on U.S. direct investment abroad

18 USES OF PRIVATE ENTERPRISE INCOME

24 SOURCES OF PRIVATE ENTERPRISE INCOME

Account 3. Personal Income and Outlay Account
Line 1 Personal current taxes 2 Personal outlays 3 Personal consumption expenditures 4 Personal interest payments 5 Personal current transfer payments 6 To government 7 To the rest of the world (net) 8 Personal saving Line 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Compensation of employees Wages and salaries Domestic Rest of the world Supplements to wages and salaries Employer contributions for employee pension and insurance funds Employer contributions for government social insurance Proprietors’ income with IVA and CCAdj Rental income of persons with CCAdj Personal income receipts on assets Personal interest income Personal dividend income Personal current transfer receipts Government social benefits From business (net) Less: Contributions for government social insurance, domestic

9 PERSONAL TAXES, OUTLAYS, AND SAVING

26 PERSONAL INCOME

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Preview of the 2013 Comprehensive Revision of the NIPAs
Table 5. Summary National Income and Product Accounts—Table Ends
Account 4. Government Receipts and Expenditures Account

March 2013

Line 1 2 3 4 5 6 7 8 9 10 11 Consumption expenditures Current transfer payments Government social benefits To persons To the rest of the world Other current transfer payments to the rest of the world (net) Interest payments Subsidies Net government saving Federal State and local

Line 13 14 15 16 17 18 19 20 21 22 23 24 25 Current tax receipts Personal current taxes Taxes on production and impor ts Taxes on corporate income Taxes from the rest of the world Contributions for government social insurance Income receipts on assets Interest and miscellaneous receipts Dividends Current transfer receipts From business (net) From persons Current surplus of government enterprises

12 GOVERNMENT CURRENT EXPENDITURES AND NET SAVING

26 GOVERNMENT CURRENT RECEIPTS

Account 5. Foreign Transactions Current Account
Line 1 Expor ts of goods and services 2 Income receipts from the rest of the world 3 Wage and salary receipts 4 Income receipts on assets 5 Interest 6 Dividends 7 Reinvested earnings on U.S. direct investment abroad Line 9 10 11 12 13 14 15 16 17 18 19 20 Imports of goods and services Income payments to the rest of the world Wage and salary payments Income payments on assets Interest Dividends Reinvested earnings on foreign direct investment in the United States Current taxes and transfer payments to the rest of the world (net) From persons (net) From government (net) From business (net) Balance on current account, NIPAs

8 CURRENT RECEIPTS FROM THE REST OF THE WORLD

21 CURRENT PAYMENTS TO THE REST OF THE WORLD AND BALANCE ON CURRENT ACCOUNT

For the upcoming comprehensive revision, BEA will feature output and price measures that use 2009 as the reference year; currently, 2005 is used as the reference year. Quantity and price indexes will be expressed as 2009 equal to 100. The estimates for most tables show­ ing “real,” or chained-dollar, estimates will begin with 1999.48
48. The reference years used in tables 1.1.6A, 1.1.6B, and 1.1.6C (1937, 1952, and 1972, respectively) will not be changed. Table 1.1.6D will present chained-dollar estimates for 1982–2002 using 1992 as the reference year.

Updating the reference year will not affect the per­ cent changes in the price or quantity indexes (or chained-dollar estimates) because these changes are measured as chain-type indexes.49 Revisions to the per­ cent changes in NIPA aggregates will reflect the incor­ poration of newly available and revised source data as well as changes in definitions, classifications, and methodologies.
49. See J. Steven Landefeld and Robert P. Parker, “Preview of the Compre­ hensive Revision of the National Income and Product Accounts: BEA’s New Featured Measures of Output and Prices,” SURVEY 75 (July 1995): 31–38.

Table 6 follows.

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March 2013

Table 6. Upcoming Changes to the NIPA Tables—Continues

Table number New Old Table title Summary Table A A Summary National Income and Product Accounts In account 1, “gross private domestic investment” includes the new series “intellectual proper ty products,” “equipment and software” renamed “equipment,” and “wage and salary accruals” renamed “wages and salaries.” In account 3, “compensation of employees, received” renamed “compensation of employees,” and “wage and salary disbursements” renamed “wages and salaries.” In accounts 1,3, 4, and 5, “wage accruals less disbursements” removed from the accounts. Major changes

identify the units used to present the estimates will be changed from “index numbers, 2005=100” to “index numbers, 2009=100” or from “chained (2005) dollars” to “chained (2009) dollars.” NIPAs National income and product accounts

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Table 6. Upcoming Changes to the NIPA Tables—Continues

Table number Table title New Old Percent Change From Preceding Period in Real Gross Domestic Product, Expanded Detail “Gross private domestic investment” includes the new series “intellectual property products” and the three components “software,” “research and development,” and “entertainment, literary, and artistic originals”; “equipment and software” renamed “equipment”; “information processing equipment and software” renamed “information processing equipment.” See the text. See changes for table 1.5.1. See changes for table 1.5.1. See changes for table 1.5.1. See changes for table 1.5.1. See changes for table 1.5.1. See changes for table 1.5.1. See changes for table 1.5.1. See changes for table 1.5.1. 1.5.1* 1.5.1* Major changes

National Income by Sector, Legal Form of Organization, and Type of Income 1.14* 1.14* Gross Value Added of Corporate Business in Current Dollars and Gross See changes for table 1.12. Value Added of Nonfinancial Corporate Business in Current and Chained Dollars 1.15* 1.15* Price, Costs, and Profit Per Unit of Real Gross Value Added of Nonfinancial Corporate Business 1.16 1.16 Sources and Uses of Private Enterprise Income 1.17.1* 1.17.1* Percent Change From Preceding Period in Real Gross Domestic Product, Real Gross Domestic Income, and Other Major NIPA Aggregates 1.17.5* 1.17.5* Gross Domestic Product, Gross Domestic Income, and Other Major NIPA Aggregates 1.17.6* 1.17.6* Real Gross Domestic Product, Real Gross Domestic Income, and Other Major NIPA Aggregates, Chained Dollars Section 2. Personal Income and Outlays 2.1* 2.2A 2.1* 2.2A Personal Income and Its Disposition Wages and Salaries by Industry

“Wage and salary accruals” renamed “wages and salaries.” “Disbursements” and “wage accruals less disbursements” removed from table. See the text. See changes for table 1.10. “Wage and salary accruals” renamed “wages and salaries.” See the text. See changes for table 1.12.

“Compensation of employees, received” renamed “compensation of employees.” “Wage and salary disbursements” renamed “wages and salaries.” See the text. “Disbursements” dropped from table title. “Wage and salary disbursements” renamed “wages and salaries.” See the text.
identify the units used to present the estimates will be changed from “index numbers, 2005=100” to “index numbers, 2009=100” or from “chained (2005) dollars” to “chained (2009) dollars.” NIPAs National income and product accounts

* “Selected NIPA Tables” that are published monthly in the SUR VEY OF CURRENT BUSINESS. NOTE. Except for tables 1.1.6A, 1.1.6B, 1.1.6C, and 1.1.6D, the reference year for the quantity indexes, price indexes, and chained dollars will be updated from 2005 to 2009, and the lines in the table titles that

32

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March 2013

Table 6. Upcoming Changes to the NIPA Tables—Continues

Table number New 2.2B* Old 2.2B* Wages and Salaries by Industry Table title Major changes See changes for table 2.2A.

Section 3. Government Current Receipts and Expenditures 3.1* 3.2* 3.3* 3.4 3.5 3.6 3.7 3.8 3.9.1* 3.1* 3.2* 3.3* 3.4 3.5 3.6 3.7 3.8 3.9.1* Government Current Receipts and Expenditures Federal Government Current Receipts and Expenditures State and Local Government Current Receipts and Expenditures Personal Current Tax Receipts Taxes on Production and Imports Contributions for Government Social Insurance Government Current Transfer Receipts Current Surplus of Government Enterprises Percent Change From Preceding Period in Real Government Consumption Expenditures and Gross Investment “Wage accruals less disbursements” removed from table. See the text. See changes for table 3.1. See changes for table 3.1.

3.9.2* 3.9.2* Contributions to Percent Change in Real Government Consumption Expenditures and Gross Investment
* “Selected NIPA Tables” that are published monthly in the SUR VEY OF CURRENT BUSINESS. NOTE. Except for tables 1.1.6A, 1.1.6B, 1.1.6C, and 1.1.6D, the reference year for the quantity indexes, price indexes, and chained dollars will be updated from 2005 to 2009, and the lines in the table titles that

“Gross investment” includes the new series “intellectual property products” and the two components “software” and “research and development”; “equipment and software” renamed “equipment.” See the text. See changes for table 3.9.1.

identify the units used to present the estimates will be changed from “index numbers, 2005=100” to “index numbers, 2009=100” or from “chained (2005) dollars” to “chained (2009) dollars.” NIPAs National income and product accounts

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33

Table 6. Upcoming Changes to the NIPA Tables—Continues

Table number New Old Table title Real Government Consumption Expenditures and Gross Investment, Quantity Indexes Price Indexes for Government Consumption Expenditures and Gross Investment Government Consumption Expenditures and Gross Investment Real Government Consumption Expenditures and Gross Investment, Chained Dollars Percent Change From Preceding Period in Real Government Consumption Expenditures and General Government Gross Output Real Government Consumption Expenditures and General Government Gross Output, Quantity Indexes Price Indexes for Government Consumption Expenditures and General Government Gross Output Government Consumption Expenditures and General Government Gross Output Real Government Consumption Expenditures and General Government Gross Output, Chained Dollars Percent Change From Preceding Period in Real National Defense Consumption Expenditures and Gross Investment by Type Major changes See changes for table 3.9.1. See changes for table 3.9.1. See changes for table 3.9.1. See changes for table 3.9.1.

“Gross investment” includes the new series “intellectual property products” and the two components “software” and “research and development,” which is removed from “intermediate goods and services purchased”; “equipment and software” renamed “equipment”; “electronics and software” renamed “electronics.” See the text. Real National Defense Consumption Expenditures and Gross Investment by See changes for table 3.11.1. Type, Quantity Indexes Price Indexes for National Defense Consumption Expenditures and Gross See changes for table 3.11.1. Investment by Type National Defense Consumption Expenditures and Gross Investment by Type See changes for table 3.11.1. Real National Defense Consumption Expenditures and Gross Investment by See changes for table 3.11.1. Type, Chained Dollars Government Social Benefits Subsidies Government Social Insurance Funds Current Receipts and Expenditures Percent Change From Preceding Period in Real Government Consumption Additional detail on “state and local” and “health” presented. Expenditures and Gross Investment by Function Contributions to Percent Change From Preceding Period in Real See changes for table 3.15.1. Government Consumption Expenditures and Gross Investment by Function Real Government Consumption Expenditures and Gross Investment by See changes for table 3.15.1. Function, Quantity Indexes Price Indexes for Government Consumption Expenditures and Gross See changes for table 3.15.1. Investment by Function Government Consumption Expenditures and Gross Investment by Function See changes for table 3.15.1. Real Government Consumption Expenditures and Gross Investment by See changes for table 3.15.1. Function, Chained Dollars Government Current Expenditures by Function See changes for table 3.15.1. Selected Government Current Expenditures by Function Relation of Federal Government Current Receipts and Expenditures in the National Income and Product Accounts to the Consolidated Cash Statement, Fiscal Years Relation of Federal Government Current Receipts and Expenditures in the Under “net purchases of nonproduced assets,” “outer continental National Income and Product Accounts to the Budget, Fiscal Years shelf ” and “land and other” removed. Relation of State and Local Government Current Receipts and Expenditures Additional reconciliation items for imputed transactions associated in the National Income and Product Accounts to Bureau of Census with defined benefit pension plans added. Government Finances Data, Fiscal Years State Government Current Receipts and Expenditures See changes for table 3.1. Local Government Current Receipts and Expenditures See changes for table 3.1.
identify the units used to present the estimates will be changed from “index numbers, 2005=100” to “index numbers, 2009=100” or from “chained (2005) dollars” to “chained (2009) dollars.” NIPAs National income and product accounts

* “Selected NIPA Tables” that are published monthly in the SUR VEY OF CURRENT BUSINESS. NOTE. Except for tables 1.1.6A, 1.1.6B, 1.1.6C, and 1.1.6D, the reference year for the quantity indexes, price indexes, and chained dollars will be updated from 2005 to 2009, and the lines in the table titles that

34

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March 2013

Table 6. Upcoming Changes to the NIPA Tables—Continues

Table number New 3.22 3.23 Old 3.22 3.23 Table title Federal Government Current Receipts and Expenditures, Not Seasonally Adjusted State and Local Government Current Receipts and Expenditures, Not Seasonally Adjusted See changes for table 3.1. See changes for table 3.1. Major changes

Section 4. Foreign Transactions 4.1* 4.1* Foreign Transactions in the National Income and Product Accounts 4.2.1* 4.2.1* Percent Change From Preceding Period in Real Exports and Imports of Goods and Services by Type of Product 4.2.2* 4.2.2* Contributions to Percent Change in Real Exports and in Real Imports of Goods and Services by Type of Product 4.2.3* 4.2.3* Real Exports and Impor ts of Goods and Services by Type of Product, Quantity Indexes 4.2.4* 4.2.4* Price Indexes for Exports and Impor ts of Goods and Services by Type of Product 4.2.5* 4.2.5* Exports and Imports of Goods and Services by Type of Product 4.2.6* 4.2.6* Real Exports and Impor ts of Goods and Services by Type of Product, Chained Dollars 4.3A 4.3A Relation of Foreign Transactions in the National Income and Product Accounts to the Corresponding Items in the International Transactions Accounts 4.3B 4.3B Relation of Foreign Transactions in the National Income and Product Accounts to the Corresponding Items in the International Transactions Accounts Section 5. Saving and Investment 5.1* 5.2.3 5.1* 5.2.3 “Wage accruals less disbursements” removed from table. See the text. Real Gross and Net Investment by Major Type, Quantity Indexes For both private and government investment, “gross investment” includes the new series “intellectual property products” and lines for “consumption of fixed capital” and for “net investment”; “equipment and software” renamed “equipment.” See the text. Gross and Net Investment by Major Type See changes for table 5.2.3. Real Gross and Net Investment by Major Type, Chained Dollars See changes for table 5.2.3. Percent Change From Preceding Period in Real Private Fixed Investment by “Gross private domestic investment” includes the new series Type “intellectual property products” and the three components “software,” “research and development,” and “entertainment, literary, and artistic originals”; “equipment and software” renamed “equipment.” See the text. Contributions to Percent Change in Real Private Fixed Investment by Type See changes for table 5.3.1. Real Private Fixed Investment by Type, Quantity Indexes See changes for table 5.3.1. Price Indexes for Private Fixed Investment by Type See changes for table 5.3.1. Private Fixed Investment by Type See changes for table 5.3.1. Real Private Fixed Investment by Type, Chained Dollars See comments for table 5.3.1. Percent Change From Preceding Period in Real Private Fixed Investment in Residential “brokers’ commissions on sale of structures” renamed Structures by Type residential “brokers’ commissions and other ownership transfer costs.” See text. Contributions to Percent Change in Real Private Fixed Investment in See changes for table 5.4.1. Structures by Type Real Private Fixed Investment in Structures by Type, Quantity Indexes See changes for table 5.4.1. Price Indexes for Private Fixed Investment in Structures by Type See changes for table 5.4.1. Private Fixed Investment in Structures by Type See changes for table 5.4.1. Real Private Fixed Investment in Structures by Type, Chained Dollars See changes for table 5.4.1. Percent Change From Preceding Period in Real Private Fixed Investment in “And Software” removed from table title. Table presents investment in Equipment by Type equipment; investment in software presented in new tables 5.6.1–5.6.6. “Equipment and software” renamed “equipment.” See the text. Contributions to Percent Change in Real Private Fixed Investment in See changes for table 5.5.1. Equipment by Type Real Private Fixed Investment in Equipment by Type, Quantity Indexes See changes for table 5.5.1. Price Indexes for Private Fixed Investment in Equipment by Type See changes for table 5.5.1.
identify the units used to present the estimates will be changed from “index numbers, 2005=100” to “index numbers, 2009=100” or from “chained (2005) dollars” to “chained (2009) dollars.” NIPAs National income and product accounts

* “Selected NIPA Tables” that are published monthly in the SURVEY OF CURRENT BUSINESS. NOTE. Except for tables 1.1.6A, 1.1.6B, 1.1.6C, and 1.1.6D, the reference year for the quantity indexes, price indexes, and chained dollars will be updated from 2005 to 2009, and the lines in the table titles that

5.5.5 Private Fixed Investment in Equipment by Type See changes for table 5.5.1. 5.5.6 Real Private Fixed Investment in Equipment by Type, Chained Dollars See changes for table 5.5.1. .......... Percent Change From Preceding Period in Real Private Fixed Investment in New table presents the new series “private investment in intellectual Intellectual Property Products property products” and the three components “software,” “research and development,” and “entertainment, literary, and artistic originals.” See the text. ........... Contributions to Percent Change in Real Private Fixed Investment in New table. See changes for table 5.6.1. Intellectual Property Products ........... Real Private Fixed Investment in Intellectual Property Products, Quantity New table. See changes for table 5.6.1. Indexes ........... Price Indexes for Private Fixed Investment in Intellectual Property Products New table. See changes for table 5.6.1. ........... Private Fixed Investment in Intellectual Property Products New table. See changes for table 5.6.1. ........... Real Private Fixed Investment in Intellectual Property Products, Chained New table. See changes for table 5.6.1. Dollars 5.6.5A Change in Private Inventories by Industry 5.6.5B* Change in Private Inventories by Industry 5.6.6A Real Change in Private Inventories by Industry, Chained Dollars 5.6.6B* Real Change in Private Inventories by Industry, Chained Dollars 5.7.5A Private Inventories and Domestic Final Sales of Business by Industry 5.7.5B* Private Inventories and Domestic Final Sales by Industry 5.7.6A Real Private Inventories and Real Domestic Final Sales of Business by Industry, Chained Dollars 5.7.6B* Real Private Inventories and Real Domestic Final Sales by Industry, Chained Dollars 5.7.9A Implicit Price Deflators for Private Inventories by Industry 5.7.9B* Implicit Price Deflators for Private Inventories by Industry “Gross investment” includes the new series “intellectual property products” and the two components “software” and “research and development”; “equipment and software” renamed “equipment.” See the text. See changes for table 5.9.3A. See changes for table 5.9.3A. See changes for table 5.9.3A. See changes for table 5.9.3A. See changes for table 5.9.3A. See changes for table 5.9.3A. See changes for table 5.9.3A. “Gross investment,” “consumption of fixed capital,” and “other changes in volume of assets” include the new series “intellectual property products”; “equipment and software” renamed “equipment.” Under “stock reconciliation adjustments,” lines from the addenda have been added. See the text.

National Income Without Capital Consumption Adjustment by Industry National Income Without Capital Consumption Adjustment by Industry National Income Without Capital Consumption Adjustment by Industry Compensation of Employees by Industry Compensation of Employees by Industry Compensation of Employees by Industry Compensation of Employees by Industry Wages and Salaries by Industry Wages and Salaries by Industry Wages and Salaries by Industry Wages and Salaries by Industry

“Accruals” dropped from the table title. “Wage and salary accruals” renamed “wages and salaries.” See the text. See changes for table 6.3A. See changes for table 6.3A. See changes for table 6.3A.

* “Selected NIPA Tables” that are published monthly in the SUR VEY OF CURRENT BUSINESS. NOTE. Except for tables 1.1.6A, 1.1.6B, 1.1.6C, and 1.1.6D, the reference year for the quantity indexes, price indexes, and chained dollars will be updated from 2005 to 2009, and the lines in the table titles that

identify the units used to present the estimates will be changed from “index numbers, 2005=100” to “index numbers, 2009=100” or from “chained (2005) dollars” to “chained (2009) dollars.” NIPAs National income and product accounts

36

Preview of the 2013 Comprehensive Revision of the NIPAs

March 2013

Table 6. Upcoming Changes to the NIPA Tables—Continues

Table number New 6.4A 6.4B 6.4C 6.4D 6.5A 6.5B 6.5C 6.5D 6.6A 6.6B 6.6C 6.6D 6.7A 6.7B 6.7C 6.7D 6.8A 6.8B 6.8C 6.8D 6.9B 6.9C 6.9D 6.10B 6.10C 6.10D Old 6.4A 6.4B 6.4C 6.4D 6.5A 6.5B 6.5C 6.5D 6.6A 6.6B 6.6C 6.6D 6.7A 6.7B 6.7C 6.7D 6.8A 6.8B 6.8C 6.8D 6.9B 6.9C 6.9D 6.10B 6.10C 6.10D Table title Full-Time and Part-Time Employees by Industry Full-Time and Part-Time Employees by Industry Full-Time and Part-Time Employees by Industry Full-Time and Part-Time Employees by Industry Full-Time Equivalent Employees by Industry Full-Time Equivalent Employees by Industry Full-Time Equivalent Employees by Industry Full-Time Equivalent Employees by Industry Wages and Salaries Per Full-Time Equivalent Employee by Industry Wages and Salaries Per Full-Time Equivalent Employee by Industry Wages and Salaries Per Full-Time Equivalent Employee by Industry Wages and Salaries Per Full-Time Equivalent Employee by Industry Self-Employed Persons by Industry Self-Employed Persons by Industry Self-Employed Persons by Industry Self-Employed Persons by Industry Persons Engaged in Production by Industry Persons Engaged in Production by Industry Persons Engaged in Production by Industry Persons Engaged in Production by Industry Hours Worked by Full-Time and Part-Time Employees by Industry Hours Worked by Full-Time and Part-Time Employees by Industry Hours Worked by Full-Time and Part-Time Employees by Industry Employer Contributions for Government Social Insurance by Industry Employer Contributions for Government Social Insurance by Industry Employer Contributions for Government Social Insurance by Industry Employer Contributions for Employee Pension and Insurance Funds by Industry and by Type Major changes

See changes for table 6.3A. See changes for table 6.6A. See changes for table 6.6A. See changes for table 6.6A.

Employer Contributions for Employee Pension and Insurance Funds by Industry and by Type

6.11C 6.11C

Employer Contributions for Employee Pension and Insurance Funds by Industry and by Type

* Selected NIPA Tables” that are published monthly in the SUR VEY OF CURRENT BUSINESS. NOTE. Except for tables 1.1.6A, 1.1.6B, 1.1.6C, and 1.1.6D, the reference year for the quantity indexes, price indexes, and chained dollars will be updated from 2005 to 2009, and the lines in the table titles that

identify the units used to present the estimates will be changed from “index numbers, 2005=100” to “index numbers, 2009=100” or from “chained (2005) dollars” to “chained (2009) dollars.” NIPAs National income and product accounts

March 2013

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37

Table 6. Upcoming Changes to the NIPA Tables—Continues

Table number New Old Table title Major changes Under “employer contributions for employee pension and insurance funds” by type, line 23 renamed “pension plans,” line 24 renamed “private pension plans,” line 25 renamed “defined benefit,” line 26 renamed “defined contribution”; “publicly administered government employee retirement plans” renamed “government employee pension plans,” and “federal civilian” and “federal military” combined and renamed “federal”; new line “publicly administered government employee insurance plans” added. Under “benefits paid by pension and insurance funds,” lines 38–43 combined and renamed “pension plans”; lines 50–52 “employee contributions for publicly administered government employee retirement plans” removed; new line “publicly administered government employee insurance plans” added. Details removed from this table will be presented in the new tables 7.20–23.

6.11D 6.11D Employer Contributions for Employee Pension and Insurance Funds by Industry and by Type

Nonfarm Proprietors Income by Industry Nonfarm Proprietors Income by Industry Nonfarm Proprietors Income by Industry Nonfarm Proprietors Income by Industry Noncorporate Capital Consumption Allowances by Industry Noncorporate Capital Consumption Allowances by Industry Noncorporate Capital Consumption Allowances by Industry Noncorporate Capital Consumption Allowances by Industry Inventory Valuation Adjustment to Nonfarm Incomes by Legal Form of Organization and by Industry Inventory Valuation Adjustment to Nonfarm Incomes by Legal Form of Organization and by Industry Inventory Valuation Adjustment to Nonfarm Incomes by Legal Form of Organization and by Industry Inventory Valuation Adjustment to Nonfarm Incomes by Legal Form of Organization and by Industry Net Interest by Industry Net Interest by Industry Net Interest by Industry Net Interest by Industry Corporate Profits by Industry Corporate Profits by Industry Corporate Profits by Industry Corporate Profits by Industry Corporate Profits Before Tax by Industry Corporate Profits Before Tax by Industry Corporate Profits Before Tax by Industry Corporate Profits Before Tax by Industry Taxes on Corporate Income by Industry Taxes on Corporate Income by Industry Taxes on Corporate Income by Industry Taxes on Corporate Income by Industry Corporate Profits After Tax by Industry Corporate Profits After Tax by Industry Corporate Profits After Tax by Industry Corporate Profits After Tax by Industry Net Corporate Dividend Payments by Industry Net Corporate Dividend Payments by Industry Net Corporate Dividend Payments by Industry Net Corporate Dividend Payments by Industry Undistributed Corporate Profits by Industry Undistributed Corporate Profits by Industry Undistributed Corporate Profits by Industry Undistributed Corporate Profits by Industry
identify the units used to present the estimates will be changed from “index numbers, 2005=100” to “index numbers, 2009=100” or from “chained (2005) dollars” to “chained (2009) dollars.” NIPAs National income and product accounts

* Selected NIPA Tables” that are published monthly in the SUR VEY OF CURRENT BUSINESS. NOTE. Except for tables 1.1.6A, 1.1.6B, 1.1.6C, and 1.1.6D, the reference year for the quantity indexes, price indexes, and chained dollars will be updated from 2005 to 2009, and the lines in the table titles that

* Selected NIPA Tables” that are published monthly in the SUR VEY OF CURRENT BUSINESS. NOTE. Except for tables 1.1.6A, 1.1.6B, 1.1.6C, and 1.1.6D, the reference year for the quantity indexes, price indexes, and chained dollars will be updated from 2005 to 2009, and the lines in the table titles that

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39

Table 6. Upcoming Changes to the NIPA Tables—Table Ends

Table number New 7.15 7.16 Old 7.15 7.16 Table title Relation of Net Farm Income in the National Income and Product Accounts to Net Farm Income as Published by the U.S. Department of Agriculture Relation of Corporate Profits, Taxes, and Dividends in the National Income and Product Accounts to Corresponding Measures as Published by the Internal Revenue Service Major changes

New adjustments for depreciation associated with investment in intellectual property products and for the excess of employer expenses over actual contributions for defined benefit pension plans.

7.17 7.18 7.19 7.20 7.21 7.22 7.23

7.17

Relation of Monetary Interest Paid and Received in the National Income and Product Accounts to Corresponding Measures as Published by the Internal Revenue Service 7.18 Relation of Wages and Salaries in the National Income and Product Adjustment lines modified as a result of the harmonization of the Accounts to Wages and Salaries as Published by the Bureau of Labor presentation of wages and salaries estimates. Statistics 7.20 Comparison of Receipts and Outlays of Nonprofit Institutions Serving New adjustments for investment in “research and development” and Households with Receipts and Expenses as Published by the Internal in “entertainment, literary, and artistic originals” by nonprofit Revenue Service institutions serving households. ........... Transactions of Defined Benefit Pension Plans New table. Includes transactions associated with defined benefit pension plans. See the text. ........... Transactions of Private Defined Benefit Pension Plans New table. See changes for table 7.20. ........... Transactions of Federal Government Defined Benefit Plans New table. See changes for table 7.20. ........... Transactions of State and Local Government Defined Benefit Pension Plans New table. See changes for table 7.20.
identify the units used to present the estimates will be changed from “index numbers, 2005=100” to “index numbers, 2009=100” or from “chained (2005) dollars” to “chained (2009) dollars.” NIPAs National income and product accounts

* Selected NIPA Tables” that are published monthly in the SUR VEY OF CURRENT BUSINESS. NOTE. Except for tables 1.1.6A, 1.1.6B, 1.1.6C, and 1.1.6D, the reference year for the quantity indexes, price indexes, and chained dollars will be updated from 2005 to 2009, and the lines in the table titles that